Apple Inc eyeing new Taiwanese assembly partners

Staff writer, with CNA

Apple Inc would like to expand its lineup of authorized assembly partners next year in a bid to diversify its Asian supply chain, according to Credit Suisse AG.

The potential new assemblers for iPhones and iPads include three Taiwan-based companies — Compal Communications Inc (華寶), Wistron Corp (緯創) and Inventec Appliances Corp (英華達) — that have all tendered bids to Apple, the bank said in a note to clients on Tuesday.

Though Hon Hai Precision Industry Co (鴻海) and Pegatron Corp (和碩) may be hurt by the addition of new assemblers, the three candidates still face challenges before they can start work for Apple, Credit Suisse said.

“Apple is known to have high standards, qualification periods, aggressive cost-downs, high seasonality and steep order ramps for product launches, which lead to cash flow pressure through working capital change or capital structure changes,” Credit Suisse analyst Thompson Wu (武光明) said.

“We believe the earliest these new EMS [electronic manufacturing services] partners will win Apple orders is in 2014,” Wu wrote.

Getting Apple orders may not be as lucrative as in the past, though, because the electronics vendor is expected to squeeze the prices it pays its Asian suppliers because of the recent decline in its gross margin, Barclays PLC said yesterday in a separate note.